Router market expected to take a rare dip

The Dell'Oro Group recently released some gloomy projections for various segments of the networking market, with IP lines for the PBX market expected to decline for the first time ever and the router market expected to decline for the first time in seven years.

The worldwide router market was down 23% in the first quarter of 2009, compared to the same period last year. Dell'Oro expects 2009 as a whole to be down, on the order of the decline we saw back in 2001 when the dot-com bubble burst.

Reduced IT spending from both service providers and enterprise companies are to blame for the decrease. While Dell'Oro sees "some signs of stabilization in the market," there are also "few upside opportunities" in 2009.

Interestingly, more than 90% of worldwide router revenue is concentrated in four vendors: Cisco, Juniper, Alcatel-Lucent and Huawei.

Dell'Oro says VoIP penetration will continue to grow this year, but at a slower pace than in recent years. And IP lines for the PBX market are expected to decline - the first time that's ever happened.

Meanwhile, in the Ethernet switch market, Dell'Oro is seeing a worldwide revenue decline of more than 20% in the first quarter of this year, and the rest of the year isn't looking all that great, either. Still, the research firm says that data center networking is likely to drive a rebound in that market. And 10 Gigabit Ethernet is actually expected to grow this year, the only Ethernet switch segment to do so.

Jeff Caruso is site editor at Network World.